Nokia 2012 Annual Report Download - page 32

creation and delivery as well as our logistics and to produce, create and distribute continuously
changing volumes. We may experience difficulties in adapting our supply to meet the changing
demand for our products, both ramping up and down production at our facilities as needed on a timely
basis; maintaining an optimal inventory level; adopting new manufacturing processes; finding the most
timely way to develop the best technical solutions for new products; managing the increasingly
complex manufacturing process for our high-end products, particularly the software for those products;
adapting our manufacturing processes for the requirements of the Windows Phone platform and the
production of Nokia products with Windows Phone; or achieving manufacturing efficiency and flexibility,
whether we manufacture our products and create our services ourselves or outsource to third parties.
We may also face challenges in retooling our manufacturing processes to accommodate the
production of devices in smaller lot sizes to customize devices to the specifications of certain mobile
networks operators or to comply with regional technical standards. Further, we may experience
challenges in having our services and related software fully operational at the time they are made
available to customers and consumers, including issues related to localization of the services to
numerous markets and to the integration of our services with, for example, billing systems of network
operators.
We have from time to time outsourced manufacturing of certain products and components to adjust our
production to demand fluctuations as well as to benefit from expertise others have in the production of
certain mobile technologies. For certain of our mobile products we use contract manufacturers to
produce the entire product, which is subject to certain risks involving, for example, the choice of
contract manufacturers, the need to change our mode of operation to work effectively and efficiently
with such manufacturers and otherwise manage the complexities of such relationships to ensure that
the products meet all of the required specifications.
We may also experience challenges caused by third parties or other external difficulties in connection
with our efforts to modify our operations to improve the efficiency and flexibility of our manufacturing,
service creation and delivery as well as our logistics, including, but not limited to, strikes, purchasing
boycotts, public harm to the Nokia brand and claims for compensation resulting from our decisions on
where to locate and how to utilize our manufacturing facilities, including the assembly and
customization of our devices and products. Such difficulties may result from, among other things,
delays in adjusting or upgrading production at our facilities, delays in expanding production capacity,
failure in our manufacturing, service creation and delivery as well as logistics processes, failures in the
activities we have outsourced, and interruptions in the data communication systems that run our
operations. Such failures or interruptions could result in our products not meeting our and our
customers’ and consumers’ quality, safety, security and other requirements, or being delivered late or
in insufficient or excess volumes compared to our own estimates or customer requirements, which
could have a material adverse effect on our sales, results of operations, reputation and the value of the
Nokia brand.
Most of our mobile products are manufactured and assembled in Asia primarily at our manufacturing
facilities, as well as those of our contract manufacturers. As a result, if that region or certain countries
in that region are affected by any adverse conditions that disrupt production and/or deliveries from our
facilities or those of our contract manufacturers, this could negatively affect our ability to deliver our
products on a timely basis, which may materially adversely affect our business and results of
operations.
Any actual or even alleged defects or other quality, safety and security issues in our products,
including the hardware, software and content used in our products, could have a material
adverse effect on our sales, results of operations, reputation and the value of the Nokia brand.
Our products are highly complex, and defects in their design, manufacture and associated hardware,
software and content have occurred and may occur in the future. Due to the very high production
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